ver1zon House Consumer Affairs Committee Thursday, February 7, 2013 Testimony of: before the

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1 Testimony of: ~ ver1zon before the House Consumer Affairs Committee Thursday, February 7, 2013 Frank P. Buzydlowski Director, State Government Relations Verizon Communications Strawberry Square, 12th floor 303 Walnut Street Harrisburg, PA

2 Good morning, Chairman Godshall, Chairman Daley, and members of the House Consumer Affairs Committee. My name is Frank Buzydlowski and I am the Director of State Government Relations for Verizon. It is my honor to represent our companies to the Commonwealth of Pennsylvania. And on behalf of Verizon's 31,000 employees and retirees who reside in our great state, I welcome the opportunity to share with you our perspective on today's telecommunications industry, an industry that has undergone dramatic change over the past few years. Over the course of my career with Verizon, I have personally witnessed the choices available to the "average" residential customer transformed from yesterday's plain old telephone service delivered over copper wire by one provider, to today's myriad of landline and wireless voice, broadband and other fixed and mobile communications technologies available from an unlimited number of competitors. Today's customer demands an integrated array of voice, internet and video servicesand the competitors ready to deliver those services are abundant. Amid this intense competition, Verizon has transformed itself from "the phone company" to a sophisticated communications provider delivering cutting-edge services that people demand. And we have invested Billions of dollars in this state's wireline and wireless network infrastructure to provide Pennsylvanians with a first-class network designed to handle the nextijeneration products and services that are at the heart of Pennsylvania's competitiveness.

3 Today's Evolving Marketplace u The Phone Company'' "The,.twotk Company' To understand the nature of our industry today, it is important to appreciate the everexpanding competitive alternatives that consumers have for their communication needs. As of the end of 2011, one in three households in the United States was wireless-only, eliminating landline service entirely, while another 16% consider a cell phone to be their primary line. And those customers who continue to use landlines have plenty of choices besides Verizon. The FCC reports that as of year-end 2011, CLECs and interconnected VoiP providers served 41% of the landlines in Pennsylvania, a percentage that continues to grow. And the FCC also reports that Pennsylvanians are increasingly relying on the internet to communicate: As of June 30, 2011, Pennsylvanians had over 2 million cable modem internet connections, close to 4.5 million mobile wireless internet connections, and nearly 1.2 million High-Speed OSL Internet connections. 2

4 This trend away from traditionallandline service is reflected in Verizon's business as well. In less than a decade, we have lost over half of our Pennsylvania land lines, as residence and business customers have switched to cable, wireless, VoiP and CLEC competitors, dropped second lines, and in many cases stopped wireline service all together in favor of making their wireless phones their only phones. FCC Reported PA ILEC Access Lines PA ILEC Access Lines, Today, broadband, wireless and global Internet Protocol ("IP") technologies are a major engine of Pennsylvania's economy, and Verizon is a leader in delivering those communications innovations to residents, businesses and government. Our skilled and dedicated employees build and operate the most reliable and advanced network, serving more than 2.5 million landlines statewide. We also provide broadband services through our FiOS, DSL and wireless products; we are a leading provider of GlobaJ Information Technology, security and communications solutions, and we deploy the nation's most advanced fiber-optic network. 3

5 Verizon Today Verizon FiOS FiOSTV FIOS Internet Downloads up to 300 Mbps Worry free Guarantee Verizon High Speed Internet Broadband via DSL 88% of access lines Downloads up to 15 Mbps Verizon Wireless Industry low chum Top customer care 4G L TE reaches 478 markets and M people In Pennsylvania, we have deployed over 3.4 million miles of fiber-optic cable. Our interoffice facilities are 100% fiber-optic and we are extending our fiber farther and farther into the network by using it to connect Central Offices to Remote Terminals that bring High Speed Internet technology to rural communities, providing residents and businesses in those areas another- and in many cases the first- choice for their broadband service. Verizon has also made available to many Pennsylvania customers higher download speeds of 10 to 15 megabits per second. Fiber optic cable is also being used to deploy FiOS (Fiber Optic Service), which brings video as well as high speed Internet services and telecommunications to our customers.. 4

6 Miles of Fiber Optic Cable (M) l.oooo J And Verizon Wireless 4G L TE broadband will provide a new technology for high speed Internet service, especially in rural Pennsylvania. Verizon Wireless customers use their 4G L TE-ena bled devices to surf the Web, post status updates and photos, share music, and download files at speeds up to 10 times faster than customers on 3G networks. Verizon Wireless customers can also take advantage of Homefusion TM Broadband to deliver highspeed, in-home lntemet access, particularly In areas where land-based lntemet options are limited or are not currently available. Verizon is making the investment to bring this cutting-edge 4G L TE wireless broadband network to parts of rural Pennsylvania to fulfill Chapter 30 broadband deployment commitments. Since 1993, our network capital investments for these and other upgrades exceed $15 Billion, including more than $683 Million last year alone! 5

7 Cumulative VZ Capital Investment in Pennsylvania (B) $16.0 $14.0 $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $- r--:j And the latest. most advanced utilization of our broadband network is the development of Information Communications Technology ( 1CT ) to provide "cloud services, such as the remote sharing of medical records, which helps to control costs and reduce errors. In addition, ICT and broadband technologies provide the ability to reduce energy consumption via 'Smart Grid' home monitoring and control applications. Verizon is also unwavering in its commitment to community service. The Verizon Foundation is focused on using technology to solve critical social issues in the areas of sustainability, education and healthcare. Last year alone, the foundation contributed more than $1.1 million to nonprofit groups in Pennsytvania. In addition, Verizon employees volunteered more than 25,000 hours and raised approximately $1 Million for nonprofit groups through the Verizon Volunteer Program. Through the Verizon "Check Into Literacy" program, $540,000 was donated to 50 PA nonprofits, and through Verizon's participation in the PA EITC Program, 30 nonprofrts were recipients of $200,000. 6

8 Verizon Every Day Over $1.1 Million Invested Annually in Our Communities OUR CREDO INACTION ElllCATI)N ller..aioqol.-1 fnter and uhlevenent tn Sdonoo. T-on En;IMemg... Thinkfinity 1 ~bndatbl. HEALTlfCAAE Uoetocftnologyto~ ac~ Ia c.re and chronc dllt.. EMPLOYEE YOC:E IN OlOBAL CAUSES US. FundlorU'*'o(, SevolheChlchon. W.WdWitdlle ~und -~ q....,. 1 We are proud of our accomplishments in network enhancements, High Speed lntemet expansion and community support, especially since we have made this progress during a time of incredible transformation in our business. Your committee and this General Assembly have been instrumental over the years in encouraging competition and technological advances in the communications industry by passing legislation to keep pace with those changes. In 1993, you passed HB 84, the original Chapter 30, which first recognized the importance of lightening regulation for some competitive telephone services and encouraging deployment of a more advanced network. In 2004, you passed HB 30 (Act 183 of 2004) and took another step toward recognizing the diminished need for regulation once competition has gained a foothold in the market. And In 2008, you recognized the additional changes that had occurred in the industry and passed SB 1000 to assure that the Internet remains free from unnecessary regulation, and 7

9 to incent Voice over Internet (VoiP) service development. But with the recent explosion in competitive alternatives, available services and new technologies, it is time once again for the law in Pennsylvania to keep pace with the industry. Outdated regulatory requirements in a competitive environment hold back development and harm consumer interests. The future success of our industry depends on continued legislative and regulatory policies that foster an even more innovative and competitive marketplace. Now, more than ever before, consumers are in the driver's seat to select the products, services and technologies that meet their needs and their budget. The result is robust competition that is financially beneficial to consumers. Thus, in looking forward, we encourage the members of this committee to consider new legislation to provide regulatory parity in the marketplace by adopting policies that continue to remove unneeded and outdated regulation. Continuing the work that you started with Chapter 30 (Act 183) and the VoiP Freedom Act will allow Pennsylvania to remain a national leader in encouraging growth and innovation in our industry. Last June, Representative Scott Boyd introduced a bill to continue that work, and we hope that a revised version of that bill will be introduced by a member of this committee in the near future. We look forward to working with Chairman Godshall and Chairman Daley and the members of this committee to help move that legislation to become law this session. Thank you for this opportunity to appear before you. I will be happy to answer any questions you may have when this panel concludes its testimony.

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